On
October 6, 2017, the court found Cypress Engine's DTPA
claim groundless as a matter of law and that, as a result,
HDMS was entitled to recover attorneys' fees for the
amount spent defending against this claim. (Docket Entry No.
92 at 18). The court ordered HDMS, which had previously
sought recovery of nearly all of its fees, to submit evidence
segregating the fees incurred in defending against only the
DTPA claim or, in the alternative, evidence that the fees
were for claims so interrelated that segregation is not
required. (Docket Entry No. 92 at 19).

HDMS
argues that “[h]ad Cypress not filed its groundless
claims, HDMS would not have been forced to spend even a
single dollar on this lawsuit, ” and asserts that it
incurred $450, 887.63 in fees through September 30, 2017.
(Docket Entry No. 94 at 2). HDMS argues that it is entitled
to recover at least $341, 384.97 for defending against the
DTPA claim and other claims “so interrelated to the
DTPA claim that segregation is not required.”
(Id.).

II.
Analysis

The
DTPA allows a defendant to recover attorneys' fees for
claims determined to be groundless or brought in bad faith.
Tex. Bus. & Com. Code § 17.50(c). Once the court
determines that a DTPA claim was “groundless in fact or
law or brought in bad faith, or brought for the purpose of
harassment, the court shall award to the defendant
reasonable and necessary attorneys' fees and court
costs.” Id. (emphasis added).

“To
recover attorney's fees in a case involving multiple
claims, parties must segregate the fees among the various
claims or present evidence the claims are so interrelated
that their prosecution or defense entails proof or denial of
essentially the same facts.” Stromberger v. Law
Offices of Windle Turley, No. 05-04-00050-CV, 2005
Tex.App. LEXIS 2321, at *7 (Tex. App.-Dallas [5th Dist.] Mar.
28, 2005) (citing Stewart Title Guaranty Co. v.
Sterling, 822 S.W.2d 1, 10-11 (Tex. 1991)). “Once
a trial judge concludes that a DTPA claim is groundless or
brought in bad faith, the only limitation on the award of
attorney's fees and costs to defendants is that such fees
be ‘reasonable and necessary.'” Id.
(citing Tex. Bus. & Com. Code § 17.50(c)).

HDMS
presents insufficient evidence that the claims are so
interrelated that segregation would not be possible. HDMS
argues that to defend against Cypress Engine's claims, it
had to prove “1) that a valid settlement agreement
existed between HDMS and Cypress, 2) that the settlement
agreement released the claims asserted by Cypress, and 3)
that Cypress breached the agreement first.” (Docket
Entry No. 94-1 at 3). HDMS argues that the defense that
Cypress was not entitled to rescind its release also advanced
HDMS's defense against Cypress Engine's other claims.
The same logic, however, could equally support the opposite
conclusion: if Cypress Engine had not asserted the DTPA
claim, HDMS would have incurred the same fees defending
against the other claims.

HDMS
also argues that many of the legal services it performed,
including investigation and discovery, did “double
service” in its defense against the DTPA claim and
other claims. (Docket Entry No. 94-1 at 10). While this is
undoubtedly true, it does little to prove that the DTPA and
other claims were so interrelated that it would be impossible
to segregate the fees.

In
Haynesville Shale Rentals, LLC v. Total Equip. &
Serv., No. H-12-0860, 2014 U.S. Dist. LEXIS 48478 (S.D.
Tex. Apr. 8, 2014) (Werlein, J.), the defendants requested
all the attorneys' fees incurred, asserting it was
“impossible to segregate.” Id. at
*15-16. The court found that “to award to Defendants
all attorneys' fees incurred during the course of the
entire litigation, which involved numerous other fact
intensive issues wholly unrelated to the groundless DTPA
claim, would constitute a distorted application of the
specific fee shifting proviso set forth in the DTPA.”
Id. at *17-18. As a solution, the court determined
the reasonable amount of time required to defend against the
DTPA claim. The court found that the defense of the DTPA
claim was relatively straightforward and that “from
start to finish neither Defendant should reasonably have
expended more than 60 hours of time on this simple issue so
readily disposed of as a matter of law.” Id.
at *18. The court found the hourly rate reasonable and
multiplied that amount by the number of hours the court
determined should have been spent on the DTPA claim to
calculate the fee award. Id. at *19. This approach
is consistent with the statutory limit on fee awards to
“reasonable and necessary” fees. The fee amount
HDMS seeks is unreasonable in relationship to the demands of
the entire case. To award HDMS the full amount would, as
recognized in Haynesville, distort the fee-shifting
provision of the DTPA.

The
Texas Supreme Court in Arthur Andersen v. Perry Equipment
Corporation listed eight factors to consider in
determining the reasonableness of attorneys' fees under
the DTPA:

(i) the time and labor required, the novelty and difficulty
of the questions involved, and the skill required to perform
the legal service properly;

(ii) the likelihood that the acceptance of the particular
employment will preclude other ...

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